Apple Beats Estimates, Sees iPhones Sales Decline

Apple on Tuesday reported revenue of $42.4 billion for the June quarter, the company’s 3rd fiscal quarter. That included earnings of $7.8 billion, or $1.42 earning per share (EPS). Those results were down from the year ago quarter of $49.6 billion in revenue and $10.7 billion in earnings. It was within Apple’s own guidance of $41 to $43 billion, and earnings beat analyst expectation.

Apple also reported gross margins of 38%, at the high end of its guidance range of 37% to 38%.

While down year-over-year, investors cheered because Apple beat analyst expectations of revenues at 42.1 billion and EPS of $1.38. Shares traded higher in the after-hours sessions at $101.79, a jump of $5.12 (+5.30%).

Shares closed lower during the regular session at $96.67. That’s down $0.67 (-0.69%), on heavy volume of 42.3 million shares trading hands.

Units

The company sold some 40.4 million iPhones. That’s down significantly from the year-ago quarter when Apple sold 47.5 million iPhones. iPad sales came in at 9.9 million units, while Macs clocked in at 4.2 million units.

“Our Services business grew 19 percent year-over-year and App Store revenue was the highest ever, as our installed base continued to grow and transacting customers hit an all-time record,” Apple CFO Luca Maestri said in a statement. “We returned over $13 billion to investors through share repurchases and dividends, and we have now completed almost $177 billion of our $250 billion capital return program.”

Apple is offering guidance for the September quarter of revenues between $45.5 and $47.5 billion, with gross margins between 37.5 and 38 percent.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.

A billion here, a billion there. The whole smartphone thing can’t go on forever so it levels out to a nice steadily declining revenue still made of billions, it’s only natural. No panic; just don’t expect APPL to ever surge over $100 ever again, and that’s fair. I wonder what the stock price would be if they were forthright in reporting the Watch sales, and forthcoming in BUNCHES of details about the rumored Car. Something is fishy… and in a world where social media can EXPLODE interest – think Space X launches and Tesla rumors so forth – it’s easy to summon an ARMY of support and interest even if there is relatively no substance to report; heck you could create such a crowd that would help design the damn thing via social commentary but no, Apple has been really cute dodging sales figures and disavowing potentially major new toys.
Apple could be incredibly smart, or incredibly stupid – they’ve been BOTH in the past with almost the same product the only difference being TIMING. Quick Take 100 camera failed, Newton failed, Mac Portable failed —- iPod, iPad, MacBook, iPhone (camera built in) BOOM! as Steve would say. 2 years from now Chevy Bolt and Tesla III plus BMW/Nissan/Audi’s latest EVs will all be saturating the market-3 years AFTER that Apple is supposed to release something? Ohhhhhh Kay. Talk about Ludicrous, mode.

Bryan, Apple shows incredible performance once again, in light of huge share repurchases and dividend payouts. Services are experiencing big-time growth, and for App Store revenue to hit an all-time high like it did when in the world of android most is given away demonstrates how strong Apple products are. Full steam ahead for AAPL!!

Interesting statistic: Apple expects its services sector, which continues to exhibit growth despite slumping iPhone sales, to generate revenues equivalent to that of a Fortune 100 company next year. Excellent!! Frankly, I love Apple Music, and have no problem paying the $16 a month for my family to listen to whatever they want. Apple will continue to grow this category to huge revenue over time.

During the Q&A not one analyst asked if lack of new Mac hardware( for some Mac models – we all know which ones ) is contributing to the Mac sales decline. In fact, the Mac wasn’t mentioned AT ALL by the analysts. The Mac business is still huge but didn’t merit a question. Maybe everyone was coached not to ask any embarrassing questions.

That would explain an after hours jump, but probably wouldn’t maintain up $7 for entire day today if you only took into account the “less sanguine” look. Prices would be around $95 right now in that case. Analysts, not that I give them much credit, try to look beyond the fronts of their noses. Stability of gross margin in light of iPhone SE was pointed out. Munster feels Apple is headed in the right direction and will return to growth in December quarter, even saying that even if iPhone 7 disappoints AAPL will still outperform, simply pushing demand into 2017. Several other analysts are bullish on Apple. So easy to focus on the negative, but it is refreshing to see longer term thinking from some of the analysts.

My comment about AAPL surging to over $100 was directed at cb, who I rarely read much anymore, but I couldn’t help but notice his prediction: “just don’t expect APPL to ever surge over $100 ever again” – so similar to when Brad recommended that AAPL shareholders sell at $200 a share and then watched as AAPL prices rose to $800 a share (pre 7:1 split value). Was hilarious then, and is hilarious now. So, as AAPL continues to rise, I will point to this cb failed prediction as, like I said, par for the course.

Analysts, as you implied, aren’t necessarily accurate predictors of stock price movement. My concern is a some longer term trend which I find disturbing in a company which has typically been smart about its business.

In Q3 Apple sold 4.3 million Macs generating revenue of $5.2 Billion. That’s a lot of money for a hardware lineup that another Mac site ( MR ) lists all Macs ,except MacBook, as “Don’t Buy” because of lack of refresh. Possibly this is Apple’s plan and they have something grand in the works but my suspicion is someone ( or several someones ) weren’t entirely focused on the conditions that brought them to this situation with the Mac business. Is it doom and gloom. No, not at all but disturbing it wasn’t addressed earlier.

Apple’s announced discontinuation of the Thunderbolt display was relatively innocuous and expected until they also suggested customers go elsewhere for their monitor needs. It doesn’t feel like a company focused on its computer and monitor business.